U.S. natgas futures edge higher ahead of weekly EIA storage data

Thu May 2, 2013 9:12am EDT

* Front month below Wednesday's 21-month high
    * Weather outlooks remain mixed for May
    * Nuclear power plant outages remain below normal
    * Coming Up: EIA natgas storage data 10:30 a.m. EDT (1430
GMT

    By Eileen Houlihan
    NEW YORK, May 2 (Reuters) - U.S. natural gas futures edged
higher early on Thursday, boosted by continued near-term cool
weather in the middle of the nation and expectations for another
light weekly inventory build when data is released later
Thursday.
    A long cold winter put a huge dent in inventories, and
lingering cool weather this spring has led to a slow start to
the injection season.
    Most traders and analysts expect weekly data from the U.S.
Energy Information Administration to show a build of about 28
billion cubic feet when it is released at 10:30 a.m. EDT (1430
GMT), a Reuters poll showed. 
    Stocks rose 31 bcf during the same week last year and on
average over the past five years have gained 67 bcf that week.
    Still, most traders expect the onset of milder spring
weather in the coming weeks to finally curb any late-season
heating demand before heavy cooling loads kick in.
    As of 9:04 a.m. EDT (1304 GMT), front-month June natural gas
futures on the New York Mercantile Exchange were at
$4.346 per million British thermal units, up 2 cents, or less
than 1 percent.
    The contract rose as high as $4.444 on Wednesday, its
highest mark since late July 2011, according to Reuters data.
    The latest National Weather Service six to 10-day forecast
issued on Wednesday called for above-normal temperatures for
about the western third of the country and in northern New
England and below-normal readings for most of the remainder of
the country.
    Nuclear plant outages totaled 20,400 megawatts, or 20
percent of U.S. capacity, down from 22,800 MW out on Wednesday,
22,900 MW out a year ago and a five-year average outage rate of
22,200 MW. 
    
    ANOTHER LIGHT INVENTORY BUILD EXPECTED
    Last week's EIA gas storage report showed domestic
inventories rose the prior week by 30 bcf, below Reuters poll
estimates for a 32 bcf build, the year-ago gain of 43 bcf and
the five-year average build of 50 bcf for that week.
 
    Inventories also started the injection season about three
weeks later than expected due to the unusually cold spring and
stocks, at 1.734 trillion cubic feet, are nearly 32 percent
below last year and more than 5 percent below the five-year
average.

    EIA data on Tuesday showed gross natural gas production in
February climbed for the first time in three months. Output rose
to about 1.27 bcf per day, or 1.8 percent above the same month
last year, after dropping below year-ago levels in January for
the first time since 2010. 
    The report dimmed prospects that record high production
would slow anytime soon despite Baker Hughes gas drilling rig
data last week that showed the rig count dropped to a 14-year
low.
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